December 29th, 2010
As the insanity of the 111th Congress finally draws to a maniacal close, we are reminded of an article posted approximately one year ago in which we wondered who would get to eat the worm as congressional members slugged down the last swig of their "insanely debauched statist binge." Now it seems painfully clear that both we, the American people, and the 112th Congress will be the ones retchingly gulping down the debt-marinated worm of redemption.
However, just when one bit of insanity is secured from further collateral damage, another one seems to pop up and from the oddest of sources no less. In fact, it was on the Eve of Christmas, of all times, that the Pope himself left those of us within the zone of comprehension gasping in exasperation.
You see, the Pope, in his presupposed wisdom, actually lay forth in front of his August body of Papal leadership, words that would make many a person's blood run cold in their apologetic outrage. The Pope actually stated that "child pornography was increasingly considered normal by society." To this we would respond "of which sodomic society do you speak, Mr. Pope?" Now, most earthly folk, after dropping this "D" for "Dementia bomb" would have let well enough alone; however, not so for Pope Benedict. He was just getting warmed up....(Continue Reading)
December 29th, 2010
At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.
The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.
What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”
Merck & Co Inc., the second-largest drugmaker in the U.S., last year brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering- Plough Corp., securities filings show. Merck is also appealing a federal judge’s 2009 finding that Schering-Plough owed taxes on $690 million it had earlier brought home from overseas tax-free.
The largest drugmaker, Pfizer Inc., imported more than $30 billion from offshore in connection with its acquisition of Wyeth last year, while taking steps to minimize the tax hit on its publicly reported profit.
Disclosures in Switzerland and Delaware by Eli Lilly & Co. show the Indianapolis-based pharmaceutical company carried out many of the steps for a tax-free importation of foreign cash after its roughly $6 billion purchase of ImClone Systems Inc. in 2008.
‘Trivially Small Taxes’
“Sophisticated U.S. companies are routinely repatriating hundreds of billions of dollars in foreign earnings and paying trivially small U.S. taxes on those repatriations,” said Edward D. Kleinbard, a law professor at the University of Southern California in Los Angeles. “They devote enormous resources first to moving income to tax havens, and then to bringing those profits back to the U.S. at the lowest possible tax cost.”
With the exception of the Schering-Plough case, no authority has accused Merck or Pfizer or Lilly of paying less tax than they should have. While corporations have no obligation to pay any more than the legal minimum, “the question is what should that minimum be?” said Kleinbard, a former corporate tax attorney at Cleary Gottlieb Steen & Hamilton LLP and former chief of staff at the congressional Joint Committee on Taxation.
U.S. companies overall use various repatriation strategies to avoid about $25 billion a year in federal income taxes, he said.
‘Best of Worlds’
“The current U.S. international tax system is the best of all worlds for U.S. multinationals,” said David S. Miller, a partner at Cadwalader, Wickersham & Taft LLP in New York. That’s because the companies can defer federal income taxes by shifting profits into low-tax jurisdictions abroad, and then use foreign tax credits to shelter those earnings from U.S. tax when they repatriate them, he said.
They’re aided by a cadre of attorneys, accountants and investment bankers in the tax-planning industry -- such as a panel of KPMG LLP tax advisers who held forth in a chilly hotel ballroom at a Philadelphia conference last month. There, they discussed a series of techniques for multinationals to return cash from overseas while avoiding or deferring the taxes.
KPMG tax advisers Kevin Glenn and Tom Zollo used slides to describe several methods. One diagram resembled a schematic from the Manhattan Project. Another strategy would require certain “bells and whistles” to convince regulators of an actual non- tax business purpose, Glenn explained.
Cat and Mouse
Such maneuvers reflect a decades-long cat-and-mouse game. As regulators and lawmakers tighten the rules, companies seek new, legal methods for getting around them. One of the techniques the KPMG advisers discussed was in response to loophole-closers Congress passed in August to address a projected $1.4 trillion federal budget deficit. The changes will make it harder for companies to manipulate the credits they get for taxes paid overseas.
“Some of the best minds in the country are spent all day, every day, wheedling nickels and dimes out of the tax system,” said H. David Rosenbloom, an attorney at Caplin & Drysdale in Washington, D.C., and director of the international tax program at New York University’s school of law.
Chambers, Cisco’s chief executive officer, brought up a repatriation break during the White House meeting, according to a person familiar with the discussion. It could reprise a 2004 tax holiday that allowed multinationals to return profits to the U.S. at a tax rate of 5.25 percent. U.S. corporations brought home $362 billion, with $312 billion qualifying for the relief, according to the Internal Revenue Service.
Such a move “is a short-term fix to a long-term problem, which is the uncompetitive U.S. tax structure,” said Cisco spokeswoman Jennifer Greeson Dunn. The San Jose, California- based company reported $31.6 billion of undistributed foreign earnings, on which it had paid no U.S. taxes, as of July 31.
President Obama, who campaigned in part against companies’ use of offshore havens to avoid U.S. taxes, asked Treasury Secretary Timothy F. Geithner to follow up on the issue with business leaders, according to a White House official who asked not to be identified because the discussions were private.
The argument that a new tax break for offshore earnings would generate a domestic stimulus “holds no water at all,” said Joel B. Slemrod, an economics professor at the University of Michigan’s school of business and former senior tax economist for President Reagan’s Council of Economic Advisers. U.S. companies are already sitting on a record pile of cash -- $1.9 trillion in liquid assets, according to Federal Reserve data.
“The fact that they have these cash hoards suggests that investment is not being constrained by lack of cash,” Slemrod said.
U.S. multinationals boost earnings by shifting income out of the country via transfer pricing, a system that allows them to allocate costs to subsidiaries in high-tax countries and profits to tax havens. Google Inc., for example, cut its taxes by $3.1 billion in the last three years by moving most of the income it attributed overseas ultimately to Bermuda, Bloomberg News reported in October.
The tax benefits from such profit shifting can have a greater impact on share price than boosting sales or cutting other expenses, since the reduced rate goes straight to the bottom line, said John P. Kennedy, a partner at Deloitte Tax LLP, speaking at the conference in Philadelphia Nov. 3.
Boosting Share Prices
For a hypothetical company that has 1,000 shares outstanding, has pretax income of $5,000 and trades at 20 times earnings, cutting just 2 percentage points off the rate could drive the share price up $2, Kennedy said.
“You may think two bucks isn’t much, but when you’re the CFO and she has 100,000 options, that’s pretty interesting,” he said. He cited large pharmaceutical and biotech companies, including Merck, Amgen Inc. and Eli Lilly, which have reported effective income tax rates at least 10 percentage points below the statutory 35 percent rate.
The bottom line: The effective tax rate “is, and will continue to be, the metric that is used to judge your performance,” he told the audience of corporate tax accountants and attorneys.
U.S. drugmakers shift profits overseas far in excess of actual sales there. In 2008, large U.S. pharmaceutical companies reported about four-fifths of their pre-tax income abroad, up from about a third in 1997, according to a March article in the journal Tax Notes by Martin A. Sullivan, a contributing editor and former U.S. Treasury Department tax economist. Their actual foreign sales grew more slowly, to 52 percent from 38 percent.
Deloitte’s Kennedy warned that booking large portions of income overseas can mean “you are going to strand so much cash offshore that your business chokes.” That’s because the foreign profits cannot be used for such purposes as building domestic factories without triggering federal tax. Overall, U.S. companies reported more than $1 trillion in such “indefinitely reinvested earnings” offshore at the end of 2009, according to data compiled by Bloomberg.
December 29th, 2010
December 29th, 2010
Tucker Carlson filled in for Sean Hannity Tuesday night on Fox News and made a shocking claim: Philadelphia Eagles quarterback Michael Vick should be executed.
Carlson led a panel discussion pegged to President Obama's recent phone call with the Eagles owner, in which he applauded the Eagles for giving Vick a second chance following his time in jail over his dogfighting scandal.
But Carlson is not as forgiving as Obama or the Eagles.
"I'm a Christian, I've made mistakes myself, I believe fervently in second chances," Carlson said. "But Michael Vick killed dogs, and he did in a heartless and cruel way. And I think, personally, he should've been executed for that. He wasn't, but the idea that the President of the United States would be getting behind someone who murdered dogs? Kind of beyond the pale."
Watch full segment via Mediaite:
More From Huff:
December 29th, 2010
Abercrombie was a friend of Obama's parents and knew him as a child, and is deeply troubled by the effort to cast doubt on the president's citizenship.
The newly elected governor will ask the state attorney general's office about what can be done to put an end to questions about Obama's birth documentation from Aug. 4, 1961, spokeswoman Donalyn Dela Cruz said Tuesday.
"He had a friendship with Mr. Obama's parents, and so there is a personal issue at hand," Dela Cruz said. "Is it going to be done immediately? No, the first thing on our list is the economy."
It's unclear what Abercrombie could do because Hawaii's privacy laws have long barred the release of a certified birth certificate to anyone who doesn't have a tangible interest.
Hawaii's health director said last year and in 2008 that she had seen and verified Obama's original vital records, and birth notices in two Honolulu newspapers were published within days of Obama's birth at Kapiolani Maternity and Gynecological Hospital in Honolulu.
So-called "birthers" claim Obama is ineligible to be president because they say there's no proof he was born in the United States, with many of the skeptics questioning whether he was actually born in Kenya, his father's home country.
"What bothers me is that some people who should know better are trying to use this for political reasons," Abercrombie told the Los Angeles Times last week. "Maybe I'm the only one in the country that could look you right in the eye right now and tell you, 'I was here when that baby was born.'"
Abercrombie was unavailable for additional comment Tuesday because he was vacationing on Maui, Dela Cruz said.
The Obama campaign issued a certificate of live birth in 2008, an official document from the state showing the president's birth date, city and name, along with his parents' names and races. The certificate doesn't list the name of the hospital where he was born or the physician who delivered him, information collected by the state as part of its vital records.
Abercrombie, originally from New York, befriended Obama's parents at the University of Hawaii after he moved here in 1959, the same year the islands became a state.
[Rewind video: The informercial that revived 'birther' movement]
Abercrombie, 72, has said he remembers seeing Obama as a child with his parents at social events, although he acknowledged that he didn't see his parents with their newborn son at the hospital.
The number of requests for Obama's birth information increased this month as the Obama family prepared to vacation in Hawaii.
The Department of Health had received 27 requests for the president's birth information this month as of last Thursday, up from 16 in November, said spokeswoman Janice Okubo.
Information requests rose despite a new state law allowing officials to ignore persistent and repetitive inquiries, a law that has been used about six times by the department, Okubo said.
"It's just a few people, and some of their requests are the same," she said. "The requests fluctuate from month to month."
Nearly all birth certificate information seekers are from the mainland United States, with requests rarely coming from Hawaii residents, said Cathy Takase, acting director for the state Office of Information Practices.
Takase usually responds to appeals for Obama's birth records by telling requesters that the information they're seeking is contained in records protected by statute.